IBM Is the Dow’s Apple: Big Blue's Big Impact on the Dow

After beating estimates and raising guidance in its latest earnings report,IBM is making up half of the Dow’s triple-digit gains today since Big Blue is the index’s highest-priced stock. Remember, the Dow is a price-weighted index that gives higher-priced stocks a greater weighting. So with a 4% gain today, IBM is contributing over 55 points to the Dow’s 110-point gain. In contrast, Bank of America, which is the Dow’s lowest-priced stock at $9 and change, is down 3% today, but is only pulling the Dow down by 2 points after it reported a record quarterly loss this morning.

Likening Big Blue to Big Apple

While it hits all-time highs of $182 today, IBM is to the Dow what Apple is to the Nasdaq 100. IBM now has an 11.0% weighting in the Dow, over 4 percentage points more than Caterpillar’s 6.6% weighting (at $109, Caterpillar is currently the Dow’s 2nd most influential stock).

In comparison, with a 12.3% weighting in the “modified-capitalization-weighted” Nasdaq 100 index, Apple, which reports earnings after the close today, also has a weighting that’s 4 percentage points more that the 2nd largest stock in the index (Microsoft , which has an 8.1% weighting).

Parallels are evident on the year too. Both IBM and Apple are having by far the most impact on the Dow and Nasdaq 100, respectively, this year. In fact, their contribution to the Dow and Nasdaq 100 has been bigger than the combined impact from the 2nd and 3rd most influential stocks in the respective indices.

Additionally, IBM has made up 30% of the Dow’s 2011 gains, while Apple has accounted for 26% of the Nasdaq 100’s gains this year.